USD/JPY Analysis: Rate Drops to New Yearly Low

The USD/JPY chart shows the rate has fallen below its 5 August low.

This decline was influenced by comments from Bank of Japan representative Junko Nakagawa, who stated that the bank would continue raising interest rates if inflation keeps decreasing.

“Given that real interest rates are currently very low, we will adjust the level of monetary support to ensure the sustainable and stable achievement of our 2% inflation target,” she said.

Technical analysis of the USD/JPY chart shows:

→ Since early August, the price movement has fit within a descending channel (shown in red). → The price has fallen to the median of this channel, which continues to show signs of support (indicated by arrows).

Bearish dominance is evident as:
→ The 143.7 level has shifted from support to resistance, as previously happened with the 149 level.
→ The price is below the Resistance 1 trendline.

It’s worth noting that at 15:30 today, the US Consumer Price Index will be released, which is likely to cause increased market volatility.

As a result, bears may attempt to push the rate down to the psychological level of 140 yen per dollar as early as today.